The US dollar reversed its Asian session uptrend against its major rivals ahead of the Wall Street open on Monday morning as risk appetite seems to be re-emerging ahead of Friday’s pivotal job data.
The U.S. dollar was firmer in the Asian session as the market hailed the news of Al Qaeda leader Osama bin Laden’s death.
U.S. President Barack Obama told the nation late Sunday evening that military forces of the United States last week engaged and killed terrorist leader Osama bin Laden, the mastermind of the 9/11 attacks.
The dollar’s down trend accelerated last week after Fed Chairman Bernanke said that there is no time frame for the central bank to exit from policy stimulus and affirmed the central bank’s intentions to continue QE2 till June.
The market focus now shifts to data on construction spending and the results of ISM manufacturing survey to get clues on the health of the economy.
The results of the manufacturing survey of the Institute for Supply Management, which are based on data compiled from purchasing and supply executives nationwide, are due out at 10:00 AM ET. Economists expect the index to slide to 59.5 from 61.2 in March, reflecting shortages of components sourced from Japan.
The Commerce Department’s construction spending report to be released at 10 AM ET is expected to show a 0.4 percent increase in spending for March. In February, spending fell 1.4 percent.
The dollar is trading lower at 0.8662 against the Swiss franc, after having gained some ground from a new record low of 0.8627 in the Asian session. The dollar has lost almost 12 percent against the alpine unit thus far this year.
The US dollar that started the day around 81.16 against the yen pulled back to a low of 81.0 before bouncing back to 81.70 following the news of Bin Laden’s death. However, the pair was in a range-bound pattern subsequently, trading between 81.60 and 81.35.
The dollar-yen pair traded in a less volatile manner, as Japan is in the midst of the so-called Golden Week Holiday, with Japanese markets remaining closed from Tuesday to Thursday.
The greenback was off the previous session’s gains against the euro, after posting solid gains in the Asian session on Bin Laden’s death. Retreating from a 5-day high of 1.4764 against the euro, the dollar is now trading at 1.4847, just 30 pips away from Friday’s fresh multi-year low.
The euro gained as eurozone manufacturing activity in April showed the second-strongest pace of expansion since August 2000.
The final Markit Manufacturing Purchasing Managers’ Index, or PMI, based on Markit survey rose to 58 in April from 57.5 in March and above the flash estimate of 57.7.
Although the dollar improved from its Asian session’s 4-day low of 1.6741 against the pound, it failed to sustain momentum and traded in a broader-range of 1.6710 and 1.6640.
The greenback rebounded to a high of 0.95 against the Canadian dollar ahead of the commencement of the North American session, up by more than 50 pips from a fresh multi-year low of 0.9449 hit in the Asian session.
Canada is holding elections today and the results are likely to have a minimal impact on the loonie.
Central Banks decisions from Europe and Asia-pacific are in focus this week, with the Reserve Bank of Australia announcing its rate decision tomorrow, while the European Central Bank and the Bank of England will announce their decisions on Thursday.